In my July 11, 2025, Q2 Barchart wrap-up on the soft commodities sector, it was concluded that sugar and cotton futures remain under pressure, with lower highs and lower lows. Despite this, the world sugar and cotton futures offer more value compared to other soft commodities, as their prices are nowhere near historical highs. The soft commodities sector has been underperforming compared to other commodity sectors in 2025, following a period where softs led the asset class in 2023 and 2024. The cyclicality of commodities plays a significant role, and if sugar and cotton prices continue to decline, they could be potential candidates for recovery as low prices lead to decreased production and inventories, ultimately resulting in increased consumption and price bottoms.
In the second quarter of 2025, nearby ICE world sugar futures experienced a decline of 17.92%, with a total decrease of 19.73% over the first half of the year, settling at 15.48 cents per pound by June 30, 2025. While world sugar futures for October delivery showed some increase in early August, they were not experiencing a significant uptrend. The bearish trend in world sugar #11 futures has been evident since early 2025.
The charts depicting the year-to-date daily performance, the five-year monthly trend, and the long-term quarterly movement of sugar futures all indicate a bearish pattern, with lower highs and lower lows prevailing over the years. Sugar prices hit a record high of 66 cents per pound in 1974 and have been on a downward trend since then, making lower highs but higher lows since the 1967 bottom.
Sugar production mainly comes from sugarcane and sugar beets, with Brazil being the leading sugarcane producer and sugar beet output being prominent in countries like Russia, France, and Germany. Many countries subsidize domestic sugar production due to historical price volatility, ensuring a stable supply of this essential ingredient in various food products. In the United States, subsidized sugar #16 futures were trading at 38 cents per pound in early August 2025, showcasing the support provided to domestic sugar production.
Brazil stands out as the leading sugar-exporting country, exporting nearly half of the world’s sugar and significantly surpassing other exporting nations like Thailand. The correlation between sugar prices and crude oil prices is notable, as rising oil prices can impact Brazilian sugar exports due to increased demand for domestic fuel production from sugarcane.
The Teucrium Sugar ETF (CANE) offers an alternative to sugar futures, providing exposure to actively traded ICE sugar futures contracts while mitigating roll risks associated with the nearby contract. The ETF’s composition aims to reduce volatility but may also limit upside potential during price rallies.
In conclusion, sugar’s bearish trend persisted into early August 2025. However, if sugar futures can break through key resistance levels at 17 and 18.50 cents per pound, the commodity may see a potential turnaround. It is essential to consider all factors influencing sugar prices, including production, exports, subsidies, and external market conditions like crude oil prices.
Please note that the information provided in this article is for informational purposes only, and the author does not hold any positions in the securities mentioned. For the original article, visit Barchart.com.
